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Sale of social participations: Current taxation

The shareholdings are that parts in which the shareholder equity of a Limited Liability Company is divided. In this way, a part of a company is acquired with all the rights and obligations that this entails.

In the case of wanting to sell the social participations, you have to know well its taxation. Below we explain the direct and indirect taxes at which these transmissions are subject, since their fiscal consequences can be decisive when carrying out an operation of this type.

Sale of social participations: indirect taxes

The sale of shareholdings, either in its entirety or only a part, is exempt from the payment of both the Transfer Tax (Imputesto sobre Transmisiones Patrimoniales) and the Value Added Tax (Impuesto sobre el Valor Añadido).

However, to avoid the sale of real estate through the sale of participations avoiding the payment of taxes, the following transmissions are subject:

  • The transmission of social participations of companies, funds and other entities which assets are composed, at least, by 50% for real estate in Spain.
  • The transmission of social participations due to contributions of real estate carried out to setting up or increases the capital of companies if between the contribution and the transfer has not passed a minimum period of 3 years.

Sale of social participations: direct taxes

If a commercial company is who sells the participations, it must add the difference between the purchase price and the transmission price to the tax base of the Corporation Tax.

If who sells the participations is a natural person, the taxation would vary according to the benefit obtained:

  • Until 6.000 Euros, the tax rate is 19%
  • From 6.000 Euros to 50.000 Euros, 21%
  • From 50.000 Euros, 23%.

Also to avoid fraud, the Article 37 of the Personal Income Tax Law (IRPF) limits the valuation of the transfer. Its value can not be less than:

  • The value of the net worth that corresponds to the transferred values resulting from the balance sheet corresponding to the last fiscal year closed prior to the date of accrual of the tax.
  • The result to capitalize at 20% the average of the last three exercises.

Due to the continuous changes on in the legislation, the number of factors that must be taken into account and the alternatives that may be more profitable is recommendable to ask a tax advisor such as GM Tax. We will analyze your case in a professional and personalized way so that you can make the best decision.

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